The 84 wind turbines erected just south of Addis Ababa, Ethiopia's capital, tower above an arid landscape of grassland and unpaved roads, inhabited mostly by small-scale farmers, who – along with 77% of the country's population – lack access to electricity.

The Ashegoda wind farm, launched in November, will produce an estimated 400 GWh of electricity per year, and forms just one piece of the Ethiopian government's strategy to harness indigenous energy resources for development. When – and to what extent – the country's rural population will benefit depends on striking a balance between investing in new grid-connected generation and effective strategies for expanding access.

Ethiopia today stands at a crossroads. In 2012, it had the world's 12th fastest growing economy (pdf). Unlike many industrialised nations, however, Ethiopia has made clear that renewable energy will be a key economic driver, emphasising green growth and clean energy as integral to its growth and transformation plan (pdf), a five-year strategy to reduce poverty and spur national development. Recognising electricity as a vital enabler of economic growth and human development, the plan aims to minimise the gap between demand and supply, increase per capita consumption, and generate power for export.

Specifically, it sets goals to increase hydropower capacity from 2000 MW to 10,000 MW, double the number of electricity customers, and raise the national electrification rate to 75%. Although its energy transformation has only just begun, two factors critical to Ethiopia's early success are worth highlighting:

Diversification plays a critical role in reducing vulnerability, not only to supply disruptions and oil price hikes, but also to climate change.

Ethiopia is highly vulnerable to extreme weather variability, particularly erratic rainfall. According to a World Bank study (pdf), climate change will likely increase the frequency of both flooding and droughts in Ethiopia, posing a significant challenge to agriculture, infrastructure, and hydropower generation. Although hydro provides cheap baseload power, over-dependence on the resource can make a country more vulnerable to drought conditions. Ethiopia has committed to developing wind and solar alongside its massive hydropower plants as guarantors against power shortages, especially during the dry season, while investments in geothermal and biofuels complement the intermittent resources.

Committed government partners

Through investment and policy reform, the Ethiopian government has played a crucial role in these early accomplishments. The country currently has the third highest public investment rate in the world (pdf), financed through a combination of restrained government spending and increased borrowing. Although Ethiopia generally struggles to attract investment, renewable project developers have recently noted the government's willingness to facilitate co-operation. Prime minister Hailemariam Desalegn has said that trade and investment have a more lasting impact than traditional aid. The government also ratified an energy proclamation in November 2013 that has eased access for private investors. However, some have criticised the government's lack of policy support mechanisms, which would provide developers with a more solid framework and financial guarantee.

Despite its recent successes, Ethiopia's energy push has run up against several major challenges. The Grand Renaissance dam, for example, raises environmental, social, and geopolitical concerns. According to the Ethiopian Electric Power Corporation, approximately 700 farmers lost some or all of their land during construction and development, and some claim government compensation was inadequate. Egypt, meanwhile, worries that the dam will curtail its own water supply, harming agricultural production and reducing electricity output from the Aswan dam – widely considered a symbol of Egyptian achievement.

The greatest challenge, however, will be to ensure that Ethiopia's current focus on developing large-scale renewable generation projects does not eclipse the urgent need to expand electricity access in low-income and rural communities. Globally, energy access is considered crucial to reducing poverty and facilitating improvements in education, health, and economic productivity. Citing energy access as a prerequisite for achieving the millennium development goals, the United Nations has designated 2014-2024 the 'Decade of sustainable energy for all'.

Renewable energy development is gaining momentum throughout sub-Saharan Africa. Aside from hydro, however, much of the focus has been on technologies like small-scale solar for off-grid communities. In contrast, Ethiopia seems to indicate a potential shift towards utility-scale renewables. This large-scale approach – particularly when combined with Ethiopia's focus on electricity for export – raises crucial questions about the future of electricity access. Even where people do have access, it can often be unaffordable or unreliable. A strategy that combines the kind of large-scale investment seen recently in Ethiopia with small-scale and distributed generation approaches – such as microgrids – could help ensure a more balanced result that will make Ethiopia a model for sustainable development.